Bank Drops Fight Against $2,000 Fee

As if Bank of America doesn't have enough problems, what with multimillion-dollar losses in uncollected loans and a recent hostile takeover attempt, it also has conceded defeat in a battle with the City of Glendale.

The bank last October quietly challenged the legality of a $2,000 special assessment levied against its Montrose branch by the city. Assessments against all merchants in Montrose were increased last year by the City Council in order to raise additional funds for promotions and other improvements to boost the area's stagnant economy.

Fees for most merchants jumped about 35%; the highest increase was imposed on banks, which had previously paid only $15 a year.

Bank of America, Security Pacific, Glendale Federal and American Savings all protested, claiming that the fee violates the California Constitution and the state Revenue and Tax Code, which exempt financial institutions from paying municipal business and license taxes.

The city doggedly defended the fee and the banks eventually backed down. Bank of America in February became the last to concede defeat.

But Bank of America officials said a $540 late-payment penalty the city tacked on the bill was salt in the wound. They asked the City Council last week to rescind the penalty. The council unanimously denied the request.

Were officials of a bank that is suffering millions of dollars in loan losses attempting to save every penny? No, corporate officials said; the matter is just not worth pursuing in court.

A bank spokesman said officials decided "it would be less expensive to pay the fee than get into some long, protracted argument where we win the battle but lose the war."